The first time I saw a dividend payment appear in my account I was in high school. I thought that I found the secret of life. I had a vision of doing whatever I wanted all day as dividends paid my expenses. It turns out it takes a little longer to do that than I thought at the time.

I am not the only one that likes dividends. John D. Rockefeller who may have been the richest man in history said, “Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” And they say money can’t buy happiness.

Generating passive income has a strong hold on the investor imagination. Passive income is earning money that takes little to no effort to acquire. Passive income can be used to fully or partially replace non-passive income (a salary) and may provide an opportunity to mitigate the risk that stems from the volatility of asset values. 

I recently wrote an article on generating $100,000 in passive income. As part of that effort, I created a spreadsheet that investors can use to project dividend income using several assumptions including savings levels, dividends yields, dividend reinvestment and dividend growth. Different tax rates can be added to the spreadsheet to account for the differences in marginal rates or investing in the super environment. 

Give it a try to see how you can grow your passive income. There are instructions in the spreadsheet which can be read by hovering over relevant cells and the blue cells can be updated based on your personal circumstances. You can read more about the spreadsheet in my article Generating $100,000 in passive income.

Morningstar passive income projection tool 

Any questions email me at mark.lamonica1@morningstar.com

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Can you retire on dividends?

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